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The Association of Independently- Owned Financial Planners (AIOFP) has put a proposal before three unnamed major industry funds to provide advice to their members, using its recent “cultural conversion” to fee-for-service as the lure.
The board of director’s proposal, which is in the hands of Money Management, is for the funds to outsource advice provision for the top 20 per cent or so of their membership to AIOFP member firms.
AIOFP executive director Peter Johnston confirmed that a “formal proposal was in front of three major industry funds” but that it would be “inappropriate for the board of direc tors to comment at this stage”.
He said that a “generic proposal” had been distributed to its 175 member advice firms, which collectively employ about 2,100 advisers, to update them on “how and why fee-for-service advis ers can assist industry funds”.
The proposal sets out to “demon strate how the industry funds’ members can benefit from a recent cultural con version in the AIOFP’s remuneration culture away from commissions to a client funded advice fee”.
It said the conversion to fee-for-serv ice has “severed our past perceived alignment with the retail ‘faction’, where the commission payments compromised our position”.
“We now consider ourselves to be a non-aligned professional group dealing and charging our clients directly while electing the best product and/or strate gy to suit their needs,” Johnston said.
The industry funds themselves would also benefit from a “new distribution channel that diminishes their need to fund media advertising and some finan cial planning services, while preserving existing funds under management [and] new inflows [while] arguably offering a superior service to members”, it said.
“It will also open up an opportu nity for industry funds to minimise or cap its media advertising and financial services provisions.”
The proposal goes on to say there is “no doubt the industry fund sector has won the public relations/education ‘battle’ over the retail funds to pro mote their cause of a high quality prod uct offering in the public domain”.
“But like any victory it comes at the expense of funding distribution channels like media advertising, and in-house financial planning prac tices comes at a cost to the health of member account balances.”
